The Cassidy Law Firm Blog

People often struggle for months, even years, with financial difficulties before finally considering bankruptcy as an option. Unfortunately, valuable assets can be lost along the way that could have been saved had the debtor considered bankruptcy earlier. One thing that does finally prompt many debtors to consider bankruptcy is the threat of foreclosure on a home. If you have been threatened with foreclosure in Ocean County, or have actually received notice that foreclosure proceedings have been initiated, you may be able to save your home by filing bankruptcy.

Most homebuyers finance the purchase of a home by taking out a mortgage loan, using the property as security for the loan. If the borrower defaults on the loan the lender can foreclose on the loan and take possession of the security, in this case the property. The property is then sold at a sheriff’s sale with the proceeds used to repay the loan. Failing to make your monthly payments as agreed to under the terms of the loan is considered a default and will eventually lead to foreclosure.

If you decide to file for bankruptcy protection you will get immediate relief from foreclosure through the automatic stay issued by the court. Once your petition for bankruptcy in Ocean County is filed the court will issue the automatic stay which prohibits all creditors from taking any further action to collect on a debt, including foreclosure proceedings. This, however, only provides temporary relief as the lender can ask for the stay to be lifted down the road.

Which chapter you use will determine how your mortgage loan is ultimately handled. If you qualify to file a chapter 7 and you are able to use an exemption to protect the equity in your home, chapter 7 is the easiest type of bankruptcy to file. You will also need to be able to catch up on your arrears in a relatively short period of time after the bankruptcy is filed if you plan to file a chapter 7 bankruptcy. While unsecured debts will be discharged in a chapter 7, your mortgage loan will have to be re-affirmed in a chapter 7. Essentially, this just means that you agree to continue under the original terms of the loan even after the bankruptcy is discharged.

If you do not qualify to file a chapter 7, have too much equity to protect with the available exemptions, or are too far behind on your payments, chapter 13 is the better option. In a chapter 13 bankruptcy you will catch up your arrears and keep the loan current over an extended period of time, typically three to five years.

If you are facing foreclosure in Ocean County, consult with an experienced Ocean County bankruptcy attorney as soon as possible.

*We are a debt relief agency. We help people file for bankruptcy relief under the Bankruptcy Code.